Wednesday, December 6, 2023

McDonald Fires CEO over consensual relationship with employee


McDonald’s fired chief executive Steve Easterbrook after the fast-food giant’s board of directors found that he “demonstrated poor judgment” in a consensual relationship with an employee, the company announced Sunday.

The board voted Friday to oust Easterbrook following a review, concluding that he violated the company’s policy against manager relationships with direct or indirect reports, the company said. Easterbrook has been replaced by Chris Kempczinski, previously the president of McDonald’s USA.

Easterbrook called his recent relationship with an employee “a mistake” in an email to McDonald’s employees.

“Given the values of the company, I agree with the board that it is time for me to move on,” he wrote.

Desiree Moore, a Chicago-based lawyer acting as a spokeswoman for Easterbrook, said in a statement that he is “deeply grateful for his time at McDonald’s.”

“He acknowledges his error in judgment and supports the Company’s decision,” Moore said, adding that Easterbrook will be not be commenting further.

Details of Easterbrook’s severance package will be disclosed by Tuesday in a federal filing, the company said.

McDonald’s has not shared further details of the relationship that led to the firing. Easterbrook, a former head of the company’s U.K. operations, is divorced, according to the Sunday Times.

He joins a growing list of chief executives forced out over relationships with employees as more companies implement rules against dating subordinates in the #MeToo era.

“We are seeing substantially more interest” in these policies, Jonathan Segal, a Philadelphia-based employment lawyer, told The Washington Post last year, after Intel’s chief executive stepped down for breaking his company’s rules with a consensual relationship.

“I’m seeing more companies ask about them,” Segal said. “I’m seeing more companies add them to their anti-harassment policies. I’ve seen more companies look at them in their codes of conduct.”

Easterbrook became chief executive in 2015 as McDonald’s struggled to keep its customers. After the chain announced a drop in U.S. sales as well as a 33 percent dip in global profits in the first quarter of that year, he promised a plan to “better address today’s consumer needs, expectations and the competitive marketplace.”

McDonald’s shares rose under Easterbrook’s leadership, and the company retains its spot at the top of U.S. fast-food sales, even as the industry faces challenges. Last year, Easterbrook — who is also on the board of Walmart — received $15.9 million in pay.

Easterbrook pushed McDonald’s forward from a tough time, said Jonathan Maze, the editor of Restaurant Business. He improved sales — still on the upswing this year — and restructured the company, speeding up decision-making and cutting hundreds of millions in overhead costs, Maze said.

He also embraced technology in the form of in-store kiosks, online-order delivery and, in March, a $300 million start-up acquisition meant to speed up McDonald’s drive-through services.

“He’s been pretty consequential,” said Maze, who considers Easterbrook’s firing as part of a trend of companies taking relationship policy violations “a lot more seriously” than they used to.

Kempczinski became head of McDonald’s USA in 2016. Easterbrook told staff that Kempczinski was “an important partner to me over the last four years and … the ideal person to take on the role of CEO.”

McDonald’s, too, praised Kempczinski’s contributions.

“Chris was instrumental in the development of the Company’s strategic plan, which has enabled global growth and leadership, and has overseen the most comprehensive transformation of the U.S. business in McDonald’s history,” Enrique Hernandez Jr., chairman of the chain’s board of directors, said in a statement.

In an interview with the Wall Street Journal, Kempczinski said that he will continue Easterbrook’s investments in technology and that he looks forward to discussing franchisees’ concerns.

“There isn’t going to be some radical, strategic shift,” he told the Journal on Sunday. “The plan is working.”



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